Monday, October 15, 2007

The transformation of AOL

AOL is transforming itself, laying off 2,000 workers, or 20% of its global workforce, as it moves its revenue model from subscription to advertising. That sounds like a smart move, since at the end of the 2nd quarter AOL had under 11 million subscribers, 60% less than its peak of 26.7 million just five years ago. That’s a loss of 8,600 subscribers a day.

In math, a transformation is a mapping of points over a domain. There are two types of transformations: alias, where the coordinate system changes, or alibi, where the coordinate system remains fixed.

Moving into advertising makes AOL’s transformation more of the alibi type. With their stock dropping to $18.81 in today’s trading, their management team may just need an alibi to keep their jobs.

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